Besides various approaches used by economists to evaluate a city’s economy, some specific components could be used to estimate the status of an economy of a given city. Some of those components are listed below (Ibrahim, Omar, & Mohamad, 2015).
| Component | Focus | Indicators of City’s Economy |
| Population | The population of a city is important to reveal the capacity of a town regarding social facilities, environment, and infrastructural capacity. | The rate of growth, median age, density, and urbanization rate. |
| Wages and Benefits | The measure of monetary outflow for all the workers except future commitments.
Employment taxes paid to the government. |
|
| Housing | The number of housed population to support the needs of the citizens | The measure of average household rental/price ration against income. The percentage of non-selling stock. |
| Employment Data | Eradication of poverty is connected to the rate of employment. Employment opportunities enhance urban growth. | The growth rate of the job industry as well as the rate of unemployment.
The poverty levels, and income distribution in the city |
| Public Facilities | Recreational and public facilities should support the population growth | The number of schools per the population.
The ratio of doctors to the population. The number of public and private health facilities. Public open spaces per population; for instance, per 1000 city dwellers. |
| Utility and Infrastructure | Electricity, water, and telecommunication supply in a city. | The consumption of water, telecommunication, and electricity. |
| Environment | The sustainability of a city’s operations is based on the balance between environment and the development | The financial budget set aside for the management of environment.
The resources allocated for environmental programs |
| Transportation | Sustainability in the transportation sector includes comfort, safety, efficient as well as clean energy use. | The percentage of public transport usage.
The expenditure by the government aimed at increasing accessibility systems. The percentage of private vehicles that operate within the city in a given period. The percentage cases recorded in a year per 10,000 population. |
| Finance and Management | How sustainable are the resources | The measure of per capita income.
Tax collected in a given city. Cash flow ration with regards to emoluments. The percentage of expenses compared to revenue |
Numbers or Statics Needed to Evaluate a City’s Economy
Therefore, to evaluate a city’s economy, various variables could be considered. However, it might not be possible to consider all the numbers or statistics since economy is multidimensional aspects and some factors must be taken as constants to yield an estimate. First, the data on revenue in a city would be required, which include revenue from assets sold and investments plus net sales (Economic, 2006). Hence, those would be the direct values generated by an economy. Secondly, distributed economic values include operating costs of the industry sector, benefits and wages of the labor force, payments made to capital providers, gross taxes paid to the government, and investment made within the town (which may include contributions to public and private projects, such as infrastructure, donations, among other investment initiatives) (Economic, 2006). Therefore, those variables would indicate how a city is performing relative to other regions.
How to Predict a City’s Economy For the Next 5 Years?
Although there are several approaches to predict a city’s performance for the next five years, time-series analysis and scenario planning would be convenient approaches for such a prediction. The former describes the time variation of a given historical data while the latter is a research method, which examines the development trend of an entity. When both methods, analysis and scenario planning, are used appropriately, they could avoid prediction errors caused by changes in the environment (Wang, 2016). Hence, using the above approaches, performance measure would look at specific variables, including employment growth, labor force participation, income levels, poverty rates, rates of unemployment, investment and new developments, population, wage levels, and earning among other measures.
What do we Need and How Do We Evaluate a City’s Economy For The Next 5 Years?
First, GDP data of a given city is required for the time series approach. In this case, data-driven modeling is used to compress all the variables that influence a city’s GDP growth to the increase history of the GDP itself (Wang, 2016). In this aspect, the analyst can fit the history and predict the change and development of GDP in a given period, such as in the next 5-years. Therefore, all the factors influencing the GDP of a city are concentrated on GDP historical records.
Scenario analysis, on the other hand, describes the likely development divisions of the future. Although an economic future of a city is uncertain, the scenario planning can analyze the macro environment of economic development of a city by identifying internal and external factors that influence the city’s development (Wang, 2016). Then, a model analysis can be done on the prospect of economic growth in a city during a five-year period. The result would then be presented in three phases, including growth scene, optimistic phrase, and pessimistic scene.
Furthermore, the scene hypothesis of economic development includes the domestic and international environment. In the international aspect, the pessimistic view would be yielded by a financial crisis, enlarged debt crisis, weaknesses in energy market, insufficient capital among other factors. An optimistic view of a city would include information/data on major innovations, technology advancement, improved trade environment, less international tension, encouraging monetary policies, and globalization (Wang, 2016). On the other hand, the domestic pessimistic view would entail local debt crisis, high cost of labor, slow technological innovation, high prices in both workforce and consumer goods, insufficient demand as well as over capacity. For an optimistic side, the city economy would be anchored on new markets and demands, enhanced exports, high income for the citizens, improved consumption levels, economic improvement with neighboring cities and regions.
The possible economic development is based on the aspect that no significant changes in the external environment or policies will happen, such as economic fluctuation and policy changes in macroeconomics. Other factors that influence the city’ economy, including population, exports, demand structure, total factor of productivity, labor force, and technological progress are also expected to remain constant. Therefore, scenario analysis uses those benchmarks to compare other situations.
Therefore, predicting GDP in scenario analysis would use the autoregressive integrated moving average (ARIMA), which would increase the reference value for both pessimistic and optimistic by 2% respectively. Then, a price deflator would divide the value (Zhu, 2014). If the average yearly growth for the previous 3-five-year periods is; for instance, 8.7%, 9.5%, and 10.3% respectively, the predictions for the next five years will fall within the range. Hence, after error adjustment, a GDP of a given city would be predicted for a given duration, such as a 5-year period.
References
Economic. (2006) Performance Indicators. Indicator Protocols Set: EC. Retrieved from http://nbis.org/nbisresources/reporting_csr/g3_economic_indicators.pdf
Ibrahim, F. I., Omar, D., & Mohamad, N. H. N. (2015). Theoretical review on sustainable city indicators in Malaysia Procedia – Social and Behavioral Sciences, 202, 322-329.
Wang, T. (2016). Forecast of economic growth by time series and scenario planning method: A case study of Shenzhen. Modern Economy. 7, 212-222.
Zhu, J. (2014). Quantitative models for performance evaluation and benchmarking: Data envelopment analysis with spreadsheets (Vol. 213). Springer.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
